Sunday, 11 May 2014

Partnerships to drive GCC petrochemicals industry

Strong regional multi-stakeholder
partnerships will be the key for a dynamic, flexible and growth-driven
petrochemicals industry, said industry experts at the sixth Supply Chain
conference, organized by the Gulf Petrochemicals and Chemicals Association
(GPCA).

“The industry needs advanced national and regional infrastructure
if we are to succeed,” said Mohammad Husain, Chairman of the GPCA Supply Chain
Committee and Chief Executive Officer of Equate.

Husain highlighted that the expansion and introduction of
new land and sea transport infrastructure would make the Gulf’s petrochemicals
industry more flexible, a trait that is necessary for this export oriented
sector.

“If you look at Kuwait, for example, 95% of the products, be
it petrochemicals or oil and gas, are exported.” The GCC exported approximately
79% of its total product portfolio to 177 countries last year, amounting to
63.4 million tons of chemicals, according to GPCA estimates.

Petrochemical exports for the year were valued at US$55.5
billion.

Husain recommended that the only way to overcome logistics
bottlenecks in the petrochemical industry is to strengthen partnerships between
GCC government entities, border and customs regulators, logistics service
providers and educational institutions.

“The supply chain is made up of many links, and we will only
be as strong as the links that make up the entire chain.” Meanwhile, ambitious
railway developments in the Gulf region will become a critical enabler for
industry growth by facilitating intra-regional chemicals trade.

The growing capabilities of the petrochemicals industry will
likewise benefit the emerging railway “For rail to succeed, petrochemicals need
to be transported on trains,” said Dr Rumaih Al- Rumaih, Chief Executive Officer, Saudi Railway
Company (SAR).

“Railways will make a return on investment only if it
transports high- value freight, like petrochemicals, across long- A
well-connected railway network will result in capacity and fuel savings, as
well as environmental benefits.

“One train is the equivalent of 600 trucks, which can result
in savings of 70% for fuel and greenhouse gas emissions,” explained Dr Al-Rumaih.

“The GCC petrochemicals industry has seen astonishing growth
over the last few years,” said Dr Abdulwahab Al-Sadoun, Secretary-General of GPCA.

“Rapid expansion may pose many challenges to the sector and
its partners in the transport, customs and logistics industries.

And, in terms of human capital, we are dependent on
educational institutions for our human resources.” While the challenges are
clear, the industry is set to see consistent growth in the near future.

The GPCA estimates that petrochemical producers in the
Arabian Gulf will increase their capacity by 45% over the next four years,
reaching 199.5 million tons by 2018.

“The emergence of the petrochemical industry is a positive
development that strenghtens the economic diversification of the region,” said
Dr Al-Sadoun.

“We predict the growing influence of this sector, as we work
in conjunction with our partners across different industries related to
infrastructure, construction and transportation. Together, we are ready to face the challenges of the
future.”